There’s more to buying a home than just simply finding your dream home and signing on the dotted line, unfortunately. One of the most important but little understood pieces of homeownership is homeowner’s insurance. Many know you need it but most don’t know how rates are calculated and further, the C.L.U.E.
As many know, when buying a home, the lender checks your credit report and score to see how well you’ve paid your bills in the past. But did you know that when buying homeowner’s insurance, insurance companies also run their own credit report on you? It’s true, your home insurance cost is based on a variety of factors including your credit score.
Furthermore, there is a shared database among insurance companies called C.L.U.E – or Comprehensive Loss Underwriting Exchange – which keeps a 5- year history of every insurance home. This system is designed to report the history of the property itself for past claims – claims paid to the seller of the property or claims paid to you if you’ve owned the home. Claims tend to be driven by issues such as structural defects, age of the home, location, weather-related claims, roofing issues, and crimes in the area.
This C.L.U.E. report, along with your credit, the location of the home, and the likelihood that a natural disaster will occur in your area all make up your monthly insurance bill. When buying a new home, consider checking the insurance rates and asking for a CLUE report. You can’t ask the insurance company to pull the report for you, but you can request the seller of the home provide the report and insight into their current insurance rates. Premiums may be higher based on the ‘claim history’ of the property.
If you want to change insurance companies, remember that all other insurance companies have access to the home’s claim history, too. So, changing insurance companies may not lower premiums as you hope; some may even be higher.
To help you sort this out and understand your C.L.U.E. report, we suggest working with a licensed insurance agent. We’d be happy to send our recommendations, if need be. Contact us today with any questions about the C.L.U.E. system or your homeowner’s insurance.